• Copyright Law and the Monkey Selfie

    In Burrow-Giles Lithographic Co/ v. Sorony, 4 S.Ct. 279 (1884), the U.S. Supreme Court dealt with a copyright issue that involved a photograph of Oscar Wilde. The court held that the photo was protected by copyright law because it was not a "emere mechanical reproduction" but, rather, was "an original work of art." The court noted that the photographer is the "author" or "inventor" of the photo.  That principle and precedent has been followed for over a century.  How could such clarity spawn disputes?

    Enter Naruto, a monkey (actually macaque) living on the island of Sulawesi in a wildlife reserve.  Naruto lived close to a village and had experienced tourists and their cameras all of his life.  Naruto is intelligent and uses his hands quite deftly.  Over the years he had learned to operate a camera and had seen tourists smile as they used the cameras. British photographer, David Slater, set his camera down whilst visiting the reserve, and Naruto grabbed it and began playing around, an activity that eventually resulted in a series of selfies that became part of one of Mr. Slater's books, published by Blubr, Inc.,  and that went viral on the Internet.  People for the Ethical Treatment of Animals (PETA) filed suit in federal court in the United States on behalf of Naruto in order to ensure his copyright protections on the photos. Naruto v. Slater, 2018 WL 362231 (N.D. Cal. 2016). 

    PETA argued that Naruto was the creator of the pictures because he understood the correlation between pressing the buttons and producing pictures.  However, the court dismissed the litigation and the Ninth Circuit affirmed the dismissal because, in the court's words, "the Copyright Act does not “plainly” extend the concept of authorship or statutory standing to animals. To the contrary, there is no mention of animals anywhere in the Act. The Supreme Court and Ninth Circuit have repeatedly referred to “persons” or “human beings” when analyzing authorship under the Act."  2018 WL 19021414 (9th Cir. 2018). The appellate court found the evidence so compelling that Naruto did not have standing to bring suit and was not protected that it awarded Mr. Slater and his publishers attorneys' fees and costs. Interestingly, the parties settled their case before it went to the U.S. Supreme Court, but the court agreed to hear it anyway because Naruto was not a party to the settlement and the court felt the need to seek a final and universal decision on the rights of animals on campus (or those depicting themselves as such). 

    While the precedent seems unique, there have been animal rights suits in the past.  Most notably there were the suits on behalf of the whales against Sea World and the suits brought by various mammals against the U.S. Navy for its low frequency detection devices in the oceans. In those cases, the courts also held that the animals did not have rights that could be violated.  Cetacean Community v. Bush, 386 F.3d 1169 (9th Cir. 2004). In addition, there is an area of law that requires some copyright clarification.  Computers create certain images and are they entitled to exercise copyright rights over those creations?  However, there are humans behind what the computers have generated -- the computers do not create images sua sponte. The United Kingdom and India do grant copyright protections to the humans who are behind computer generations. The United States has not, as yet, developed its position on this issue of copyright laws.

    Sometimes technology gets ahead of the law.  So it is with the battle between monkeys and photographers, programmers and their computer-generated products.  More clarification is certain to come.

    DISCUSSION STARTERS

    Explain what happened with the monkey and the photographer.

    Why does the monkey not have rights?

  • Canada Dry Ginger Ale Has No Ginger In It: Federal Judge Orders That the Class Action Can Proceed

    In Hashemi, et al. v. Dr Pepper Snapple Group Inc., et al., Case No. 2:17-cv-02042, three plaintiffs, representing a class of consumers who purchased Canada Dry Ginger Ale, filed a suit to recover for misrepresentation by Seven-Up and the Dr. Pepper Snapple Group that the soft drink contained ginger.  Tests submitted to the federal district court in California showed that there were not even traces of ginger in the product. The suit is one of several class actions around the country seeking compensatory damages for the missing ginger. 

    The plaintiffs also submitted evidence of advertising claims by the companies about the ginger ingredient. One of the ad quotes was, “Made from Real Ginger."  Real ginger sells for about $2 per pound.  Most interesting about the cost is that a pound of ginger is a substantial amount.  The irony is that the $2 per pound figure in the complaint may itself be deceptive.  Ginger, like most powdered spices, is the weight of air. 

    The suit is part of a movement by consumer groups, such as the Truth in Advertising effort that finds deception in ads, such as calling a "sale" a "sale" when the prices are really no different from other days or that the price was simply marked up.  The "My Pillow" company is a target for its "limited offers" of two-for-one pillows.  Called BOGO (Buy One, Get One (for free)), this type of sales promotion earns companies an "F" rating from the Advertising group because the pillows sold in the BOGO offer are not the same quality as pillows sold individually.  The Federal Trade Commission has been targeting BOGO offers for deception in advertising because the companies are generally offering a lesser quality product in the BOGO offers than the product purchased singularly. Other types of lawsuits filed include the "slack fill" suits in which customers are misled by the size of the package that actually contains much less of the product than represented by the size of the package.  Defendants in those cases include Jolly Ranchers, Hot Tamales, Mike and Ikes, Whoppers, Ice Breakers, Reese’s Pieces and pepper.  There have been 81 "slack fill" class-action suits since 2016.

    The consumer movement on ads, labels, and offers has resulted in a class-action industry for attorneys.  The lawsuits are based on the provisions in Article 2 Sales of the Uniform Commercial Code (UCC) that provide that ad content, product descriptions, product samples, and product photos constitute express warranties.  Buyers are entitled to rely on those descriptions in making their purchases and can recover compensatory damages if those descriptions are inaccurate.  The compensation per class-action plaintiff may be small, but the overall amount recovered by their attorneys is significant when the class is made up of hundreds of thousands of plaintiffs (and in some cases, millions)> . The lawyers receive 1/3 to 1/2 of the total recovery.  Th remainder goes to costs and is then distributed to the plaintiffs.  Ironically, in many settlements, the consumer plaintiffs actually do not receive cash compensation but instead receive coupons for the purchase of the product.

    DISCUSSION STARTERS

    Explain the consumer class-action movement.

    Discuss the legal basis for the claims.  

  • Is HR a Legal Problem? The Microsoft Class Action Suit by 8,630 Female Engineers

    Microsoft is a defendant in a class-action suit brought by women who worked at the company between 2011 and 2016.  The 8,630 female engineers and IT specialists are asking for between $100 million and $238 million in back pay as well as damages for 508 denied promotions.  The documents in the suit finds that the women raise an interesting question because the descriptions of their experiences at Microsoft seem to indicate that when HR at Microsoft got involved, things seemed to get worse.

    In the cases established in the documentation, managers who were found to have sexually harassed female employees were not terminated, but, rather, were transferred. When the women reported retaliation by managers who were retained after they had filed complaints, no action was taken.  An engineer's documents allege that a manager told her that he was not giving her a promotion because she had just had a baby and would probably want to have another and that he "did not want to waste a promotion on her."  Erika Fry and Claire Zillerman, "HR Is Not Your Friend." Fortune, March 21, 2018, p. 99. 

    The sexual harassment cases in the Microsoft suit present some interesting dilemmas because the legal definition of sexual harassment is quid pro quo, sexual favors in exchange for promotions and other benefits at work, or hostile environment, which is defined as an atmosphere of harassment.  In some cases, the alleged harassment is that a supervisor asked for a date twice.  That level of interaction may not reach the legal standard.  However, one of the issues in the case is whether HR was taking sufficient steps when conduct was reported to curb the behavior, which could ripen into behavior that did meet the legal standard. The interesting aspect of the Microsoft case is the alleged inaction of HR in responding appropriately to the complaints.  Is a transfer of a supervisor enough or is termination necessary?  If the conduct does not meet the legal standard, must HR take any steps, such as discussing the concern with the supervisor?

    Still other issues arose because HR did address the issues with supervisors and then the complainants returned to HR when they experienced retaliation in the form of reduced bonuses, poor performance evaluations, or being passed over for promotions.  The issue that has arisen as a result of the case is whether HR is the best place for employees to turn.  Former FOX News anchor Gretchen Carlson, who settled her lawsuit for harassment with the network, believes not, “Is human resources really the right place to go?” Because what I always equate it to is: Who’s giving them the paycheck? In the end, if the culture’s being set from the top and it’s trickling down to the lower levels, human resources may not be looking out for you.”

    have begun the process of reexamining the roles of HR and have begun using different approaches.  For example, many companies are relying more and more on third parties -- hiring outside law firms to investigate allegations so that HR employees, who do get their paychecks from the company, do not feel pressures or view issues as fairly as they should. Many companies are also abandoning the annual performance evaluation in favor of more frequent one-on-one discussions with employees about performance, concerns, and plans for improvement.  Some companies are even sending weekly surveys that allow employees to give a "thumbs up" or "thumbs down" in describing their work week as a way of tracking were problems are arising in the organization. Some companies are even hiring third-party HR companies that can serve as a sounding board for employees and as a source for advice. 

    With the annual number of cases filed with the EEOC increasing and reaching almost 85,000 in 2017, organizations are looking at HR with new eyes to see if they can adjust their processes and interactions to better understand what is happening in their workplaces before the class-action suits are filed. In the Microsoft case, many of the documents filed indicate that HR did not follow up on some of the complaints that employees made or did not take sufficient steps to stop the behaviors or take disciplinary action.  The focus is now on the HR function and how it can be improved to address the increasing litigation and regulatory complaints. 

    DISCUSSION STARTERS

    Explain what is happening with the Microsoft case.

    Discuss what issues are being addressed with the HR function.

  • David Copperfield Sued for Trick Gone Wrong; Judge Refuses to Close Courtroom

                  

    David Copperfield is a famous magician with a long-running show at the MGM Grand Hotel & Casino in Las Vegas. It sells out with regularity.

    He is being sued for negligence by an audience member who suffered serious and permanent injuries while participating as a volunteer in one of the magician’s signature illusions. Copperfield has used that trick as the finale to his show for more than 10 years. The trick involves 13 audience members selected at random. Copperfield appears to vanish them from onstage and causes them to quickly reappear in the back of the theatre.

    The illusionist was forced to disclose how the trick was done. Audience members are chosen at random and are brought to the stage. They all stand on a platform. A giant curtain is flung over it, removing the 13 from sight. In 60-90 seconds, the curtain is re-opened and the 13 people are nowhere to be seen. Copperfield then invites the audience to turn their attention to the back of the theatre. Lo and behold, there are the 13 audience members!

    Turns out, stagehands with flashlights hustle the 13 through passageways, around corners, outdoors, back indoors, and through an MGM Grand resort kichen in time to enter the back of the theatre for their reappearance. After the illusion is completed, Copperfield meets with the group of 13 and asks them not to disclose how the trick is performed.  

    In the lawsuit , plaintiff described the route as “dark and dusty,” and alleged that the outdoor portion was coated with “construction dust.” The floor surfaces changed rapidly in the passageways from linoleum to cement, to carpet, sidewalk, and tile. While traversing the passages, plaintiff tripped and fell, hitting his head on the floor. When he returned home from his trip to Las Vegas he had chronic pain, headaches and confusion. A brain scan showed a lesion. Due to his injuries he is not able to continue his successful career as a chef to the stars.

    Copperfield had sought to close the courtroom to the public to avoid making the big reveal for all to hear. Generally, courtroom proceedings in civil cases are open to the public with the objective that proceedings be conducted fairly. A judge can however close the courtroom temporarily to the public if it has a compelling reason to do so.

    Copperfield argued that the courtroom should be closed when testimony was presented about how the trick was performed because that information is a trade secret. A trade secret is information that is important to a business and is maintained confidentially, meaning shared only with a few people who all have a need to know in order to do their job. In assessing whether the machinations of the trick constitute a trade secret, and so might justify closing the courtroom to the public, the court noted that at each performance the 13 participants learned how the trick was done. The court calculated 55,000 plus people have participated in the trick over the 10 years that Copperfield has performed it, and so that many people know how the trick is done. This does not a trade secret make.

    At the trial, an exchange between Copperfield and the plaintiff’s attorney sums up liability in negligence cases. On cross-examination Copperfield was asked if he would be liable if an audience volunteer was hurt while participating in the show. The magician responded, “It depends on what happened. If I did something wrong, it would be my fault.” The attorney pressed on, “Your defense in this case is . . . if they participate and someone gets hurt, it’s their fault, not yours. Is that accurate, Yes or no? Copperfield’s response – “It’s not a simple yes-or-no answer.”

    Note: The defense of assumption of risk would not apply because the 13 audience members were unaware of what their participation would entail. Therefore, they did not voluntarily agree to take part in a knowingly dangerous activity, a prerequisite for assumption of risk to apply.

    According to Forbes magazine, Copperfield has an estimated net worth of $900 million, making him the richest magician in the world and one of the wealthiest entertainers in the world.

    The illusion in question is no longer being performed by Copperfield.

    DISCUSSION QUESTION:

    Do you agree with the court's ruling that the secret behind the trick did not constitute a trade secret?  Why or why not?

     

     

     

  • Starbucks, Anti-Bias Training, and Defamation

    The story about the Starbucks manager who is no longer a Starbucks manager has gone viral.  Holly Hylton, a former manager at a Philadelphia Starbucks, denied two male customers the use of the facility restroom because they had not ordered or purchased anything at the store.  The manager also asked the men to leave because they had not ordered anything and they refused.  The men explained that they were waiting for a friend for a business meeting.  Ms. Hylton called the police and when the men refused to leave they were arrested.  The men were not creating a scene nor were they being disruptive.  The men were black and Ms. Hylton was accused of racial bias.  Shortly following the incident, Ms. Hylton no longer worked at the Starbucks, which the company has explained was the result of mutual agreement.  Starbucks founder Howard Schultz was interviewed and said that the company's 8,000 stores would close on Sunday so that employees could participate in anti-bias training.  Mr. Schultz indicated in an interview that he had watched the tape of the actions and concluded that it was clear to him that there had been bias. 

    Ms. Hylton was following Starbucks's policy, which requires a purchase in order to use the facility's restroom.  She was also following Starbuck's policy to simply call the police when customers who have not ordered anything will not leave the store.  Ms. Hylton has been labeled a racist on social media, and Mr. Schultz's comments have portrayed Ms. Hylton in a bad light.  

    There are several legal questions that result from the incident and subsequent actions.  When can customers be asked to leave a store or restaurant?  Charisse Jones, "When Is It OK to Lick Someone Out of a Store?" USA Today, April 19, 2018, p. 1B. Businesses can have policies on handling customer behavior.  Most companies develop such policies in conjunction with legal counsel.  The key to the policies is uniform enforcement. And that enforcement cannot be tied to how the customers are dressed.  Customers should have the rules explained.  If they refuse to follow the rules then the warning about calling the police should be given.  If the customers still refuse, then the store policy of calling the police should also be followed, consistently. The goal in such policies is to prevent altercations and injuries to either or both employee and the individual involved. If the business treats everyone farily and equally, the policy is not considered racist.  The key is uniformity and treating the customers with dignity.

    Many lawyers have come forward, however, to offer to represent Ms. Hylton because of the comments made by Mr. Schultz.  His comment suggests that her behavior was racist and no one has, as yet, spoken to her or determined t=exactly what was said.  Portraying her in a bad or false light is the stuff of defamation.  In addition, there are questions related to her termination, particularly if she was following and had consistently followed store policies on customers who do not order anything at the store. 

    Starbucks acted quickly to handle the public relations issues by announcing its training.  Termination of Ms. Hylton also became public and added to the company's public relations strategies.  Protests of companies following such incidents have been common and Starbucks acted quickly to avoid additional backlash.  However, those actions, when accompanied by Mr. Schultz's statement, could have a long-term effect on Ms. Hylton's reputation as well as her ability to find employment.  Those types of damages are part of a defamation case. As one lawyer noted, "Mr. Schultz should be prepared to get out his checkbook."

    DISCUSSION STARTERS

    Explain the events and the legality of asking customers to leave.

    Discuss the elements of defamation. 

  • Recruiting Women to Have Surgery In Order to Bolster Damages in Product Liability Class Action Suits

    Lawyers are taking a step back in product liability cases and recruiting clients.  Using marketing firms and funding from banks and hedge funds, lawyers are locate women who have had a mesh implant -- either the the Boston Scientific or Johnson & Johnson brand.  They then use the information from their medical records (and it is unclear how they obtained those medical records) ot urge the women to have their mesh implants removed. The lawyers then provide the location for the surgery along with a doctor and other staff.  The women do not pay for the removal because the cost of the removal and resulting pain and discomfort will be part of the lawyers' damage recovery in their class action suits against Boston Scientific and Johnson & Johnson. If the lawyer recovers damages, the women pay nothing and, in fact, obtain damages for their pain and suffering.  If the lawyer does not recover any damages, the women must pay back the cost of the surgery plus double-digit interest. Matthew Goldstein and Jessica Silver-Greenberg, "How Profiteers Coax Women Into Surgery," New York Times,  April 15, 2018, p. A1. However, the bulk of their recovery goes to reimburse for the surgery costs (which have had interest running) and their lawyers' contingent fees. 

    The doctors participating in the program earn up to $14,000 per day for the surgeries.  The firms financing the surgeries, such as Medstar Funding, maintain that no women have undergone unnecessary surgery/ . They cite doctors' willingness to perform their surgery, according to the lawyers involved, means that the surgeries were not unnecessary because no physician would risk his license. 

    The women who have had the surgeries have been experiencing permanent damage resulting from them.  Several of them are now suing the firms that financed their surgeries.  The lawyers being named in the suits say that they had no relationship with the marketing firms that were involved in recruiting women for the removal surgeries.  During the litigation by the women, those involved in the marketing firms have taken the Fifth Amendment in depositions.  They are unwilling to disclose any financing arrangements they have had or their relationships with the lawyers who took the women's cases after their surgeries. 

    The ethical issues involved in this network that builds clients for mass tort litigation are extensive and, as yet, unaddressed. The litigation is based on claims of nondisclosure as well as the contract defense of duress and undue influence.  The women felt that they were receiving medical counseling because the marketing firms knew so much about their specific medical conditions and history.  No one has, as yet, determined how those firms got the private information on the women. 

    DISCUSSION STARTERS

    Explain what the financing, marketing, and law firms are doing with patients who have mesh implants.

    Discuss the ethical issues in the program. 

  • Marriott Fires Employee for Tibet Tweet: Beijing Makes Western Companies Toe the Line on Political Commentary

    Randy Jones worked for Marriott International managing the company's social media accounts.  As part of that job, Mr. Jones monitors what is being said about Marriott online. Marriott had emailed a survey to rewards members asking them their native countries.  The options includedTibet, Hong Kong, Macau, and Taiwan. A Canadian vendor had prepared the survey for Marriott. On January 9, 2018, the Internet began popping with outrage over Marriott's country listings.  China considers Tibet part of China and not a separate country..  However, a Tibet separatist group tweeted praise for Marriott for listing Tibet as a separate country.  Mr. Jones clicked on"like" for that Tweet.  By January 11, 2018, the Shanghai Municipal Tourism Administration questioned Marriott about the "like" Tweet as well as the country listings.  The officials asked Marriott for a public apology and demanded that it "deal seriously with the people responsible."  HR interviewed Mr. Jones, and by January 14, 2018, he had been fired.  

    The incident shows that although China censors Internet content within its own country, it also monitors the international Internet and reprimands Western companies when they appear in Internet content that criticizes China. During the past year, Delta Airlines, Zara Clothing, and Mercedes Benz have also been taken to task by Beijing for ads, posts, and statements. Mr. Jones's termination rather than a reprimand or suspension indicates the extent to which Western companies bend in order to be able to do business in China is great characterized by deference. China prohibits Internet postings that harm "the dignity of the state. Wayne Ma, "Marriott Firing Tied To Tweet Over Tibet,"  Wall Street Journal, March 5, 2018, p. B1. Mercedes was chastised by China when one of its ads featured a quote from the Dalai Lama, who is know to support Tibet separatists. 

    Mr. Jones was an hourly, at-will employee and was terminated for a violation of "company policy." However, Mr. Jones says that he was not aware of the significance of his actions, explaining that he had never been trained in Chinese social graces. An at-will employee, depending upon the particular state, cane be fired for good cause or no cause.  However, most companies follow a progressive process with preliminary steps of warnings, performance improvement plans, and ongoing reviews before taking the ultimate step of termination. 

    DISCUSSION STARTERS

    Explain the Chinese policies.

    Discuss why Marrioot had to act so quickly.  Does that change teh gradual discipline process requirements>

  • Family Dollar Pays $45 Million to Settle Gender Discrimination Wage Case; Ninth Circuit Outlaws Salary History Inquiries

        

    37,000 female managers of Family Dollar Stores, Inc, sued the company in a class action (a lawsuit with multiple plaintiffs, each of whom suffered an injury or financial loss from the same cause) claiming gender discrimination in pay. The company has settled the case for $45 million.

    The lawsuit alleged that female managers were paid less than their male counterparts for doing the same job. The suit covers the time period from July, 2002 to November, 2017. The plaintiffs referenced the Civil Rights Act of 1964 and the Equal Pay Act of 1963, federal laws that require employers to pay men and women equally for equal work, subject to differentials based on education, experience and performance.

    An additional component of the settlement is Family Dollar’s agreement to perform a “systematic review” of its process for setting starting salaries for store managers. The company also agreed to consult with experts in the fields of labor economics and industrial/organization psychology to make salary adjustments to the pay of female store managers “as deemed necessary and appropriate.”

    The settlement notwithstanding, the company denied any wrongdoing, claiming it “has treated all employees fairly with regard to salaries and other compensation at all times, regardless of sex.” Dollar Tree, which purchased Family Dollar in 2015, has not commented on the settlement.

    When a class action is settled, the judge must be involved. The judge is required to schedule a hearing to determine if the proposed settlement is fair, reasonable and adequate for class members. The judge in the Family Dollar case, US District Judge Max Cogburn in Ashville, North Carolina, has approved the settlement finding the amount reasonable, and also helpful in avoiding further litigation.

    Family Dollar is a chain of discounted variety stores. It has 8,000 stores throughout the country and is headquartered in Mathews, North Carolina.

    Cases like this one alleging unequal pay based on gender prompted many businesses to undertake pay audits and ban salary history questions in an effort to avoid gender bias because basing an employee’s salary on prior earnings perpetuates unfair pay practices including the gender pay gap. Massachusetts, California and New York City adopted laws that prevent managers from asking about an applicant’s prior salary.

    Bans on inquiries about salary history received a major boost this week with a decision from the U.S. Court of Appeals for the Ninth Circuit (Alaska, Arizona, Californian, Idaho, Montana, Nevada, Oregon and Washington) in a case involving a school math consultant. She discovered she was making $10,000 less than her male colleagues who had less experience and were doing the same work. She sued claiming a violation of the Equal Pay Act. The Fresno County California Office of Education defended the case on the ground that her salary was based on her previous wages and had nothing to do with her gender. The court rejected this arguement , noting that the Equal Pay Act was enacted to address pay inequity based on sex. The court held, “Employers cannot justify paying a woman less than a man doing similar work because of her salary history.”

    For more information, see Rizo v. Fresno County Office of Education, Ninth Circuit, No. 16-15372 (April 9, 2018)..

    DISCUSSION QUESTION:

    How does banning salary history questions from interviews with job applicants help eliminate unequal pay?

     

    Rizo v. Fresno County Office of Education

  • Your Retail Equation Score: If It's Bad, You Can't Return Stuff

    It's an algorithm, developed by a third party for retailers. It's a risk score for each customer that is based on the customer's shopping and return history.  Retail Equation is the company and it sells it service to retailers such as JCPenney, Sephora, CVS, Advance Auto Parts, Best Buy, and Dick's Sporting Goods. Khadeeja Safdar, "Unsatisfied Buyers Beware," Wall Street Journal, April 5, 2018, p. B3. Here are the factors that are used to determine your risk score, a score that tags you for possible fraud:

    • Percentage of purchased items that you return
    • Returning many items in a short period of time
    • Returning high dollar amounts
    • Returning items without a receipt
    • Returning items that are most likely to be stolen
    • Returning items after the time period the retailer has imposed
    • Returning items just as a store is closing

    A report on an individual will include, by retailer, the number of items that you have returned per year, with a complete history going back to at least 2015. When you bring in an item to return, retailers using Retail Equation ask for ID and run your name through the database to obtain information. Depending on the score, the retailer may refuse to make an exception for you, if you are beyond the time period for returns.  Or, you may be able to return the item but will receive a warning about future returns.  In some cases, you receive a cut-off-  you will not be able to return any items for 60 days.

    The social Internet sites and Yelp are full of complaints about this new process.  However, the retailers are using the service because the data base is accurate in detecting fraud, such as shoplifters.  Estimates are that retailers lose $22.8 billion to shoplifters in 2017.  Total returns last year totaled $351 billion. In short, the losses for retailers are great.   

    From a contract perspective, a retailer can set its conditions for returning goods:  receipts required; time limits; not worn (in the case of undergarments), and original packaging.  If a customer does not meet those requirements, the retailer can refuse to grant an exception.  Retailers are now adding additional restrictions to their return policies that cover the situations tagged by Retail Equation.  Return policies now include warnings about excessive returns and even that the returns are at the retailers' discretion.  If the terms of returns are disclosed, the customer is bound by them.  One of the issues with the terms is whether customers are aware of them.  Printing the terms on the back of the receipt is the safest way to establish knowledge. Some retailers post the terms online and in visible areas in their stores.

    Another issue that arises from this new use of analytics is the data base itself.  Consumer rights are affected but there are no legal mandates on copies of the report or offer corrections, similar to the regulation of consumer credit scores.  However, Retail Equation does offer free copies of your report as well as explanations of scores and the problems with retail return fraud. You can check your report here. As retailer use continues, this new niche in consumer spending may be subjected to legislation and/or regulation. The Consumer Credit Protection Act would be a model for such access and correction issues. 

    DISCUSSTION STARTERS

  • Overtime for Car Dealer Service Advisors: The U.S. Supreme Court Has Ruled for a Second Time and Rebuked the Ninth Circuit Again

    Under the regulations promulgated under the Fair Labor Standards Act (FLSA), a "salesman" who is "primarily engaged" in "servicing automobiles" is exempt from the overtime pay requirements.  29 CFR Section 779.372 (c)(1)(1971).  The provision of the law is decades old and means that service advisors cannot collect overtime for hours in excess of 40 per week. Five service advisors employed by Encino Motorcars, LLC, filed suit claiming the Encino had violated the FLSA by failing to pay them overtime when they worked longer than 40 hours per week. The workers filed suit in 2012 after the Obama administration, in 2011, revoked the rule that including service advisors as exempt employees. Encino Motor Cars, LLC v. Navarro, 2013 WL 518557 (C.D. Cal. 2013).

    The federal district court dismissed the complaint sua sponte, because it found that the statute was clear and that the promulgated rule was not within the scope and clear language of the statute. The former service advisors appealed their case to the Ninth Circuit, which reversed the lower court decision holding that it would ere on the side of the agency in its 2011 interpretation. The appellate court held that the suit could go forward and awarded the plaintiffs the costs of the appeal. Encino Motor Cars, LLC v. Navarro, 780 F.3d 1267 (2015). However, Encino Motors appealed that decision to the U.S. Supreme Court, and the court held then, in a 6-2 decision, that the Ninth Circuit could not disregard decades of a clear standard promulgated by the agency that service advisors were exempt.

    However, when the case was remanded to the Ninth Circuit, 845 F.3d 925 (9th Cir. 2017), the court discussed  that in In 1966, Congress repealed the exemption for all employees of an automobile dealership and replaced it with a limited exemption for only three specific vocations: salesmen, partsmen, and mechanics. The court then noted that the Occupational Outlook Handbook listed many common vocations. Among those categories of workers that one might have expected to find at automobile dealerships in 1966, three job titles—emphasized below—clearly align with the three job titles exempted by Congress:

    • Automobile body repairmen
    • Automobile mechanics
    • Automobile painters
     Automobile parts countermen
    • Automobile salesmen
    • Automobile service advisors
    • Automobile upholsterers
    • Bookkeeping workers
    • Cashiers
    The court went on to hold that service advisors were not exempt because they were not salesman engaged in selling cars and that they were not repairing cars or selling parts.  However, on appeal to the U.S. Supreme Court for the second time, in a 5-4 decision, the court held that although service advisors may not actually repair the vehicles or sell the parts that they are primarily engaged in servicing automobiles and, as such, are exempt. Justice Thomas wrote:
    The Ninth Circuit concluded that service advisors are not covered because the exemption simply does not apply to “salesm[e]n ... primarily engaged in ... servicing automobiles.” The Ninth Circuit invoked the distributive canon to reach this conclusion. Using that canon, it matched “salesman” with “selling” and “partsma[n] [and] mechanic” with “servicing.” We reject this reasoning. 2018 WL 1568025 (2018). Justice Thomas wrote, "True, service advisors do not spend most of their time physically repairing automobiles, but the statutory language is not so constrained. . . . Partsmen do not spend most of their time under the hood."  Justice Thomas noted that a service advisor is a salesman who is engaged in servicing automobiles. 
    The case clarifies the exemption status at automobile dealerships, but also provides insight into statutory interpretation and the restrictions federal agencies face in trying to go beyond the plain meaning of statutory authority and definitions. 
    DISCUSSION STARTERS
    Explain the history of the case.
    Discuss why there is this exemption under the FLSA for certain car dealership employees. 

     

     

  • Angler Fails Polygraph and Loses $2.8 Million Prize Money; Passing Test Was Condition Precedent

                        

     

    This is not the typical tale of a fisherman misrepresenting the size of the fish that got away. Instead, it’s a story that underscores the importance of following tournament rules.

    Ocean City, Maryland hosts the largest billfish fishing tournament in the world, called the White Marlin Open (WMO). (Billfish are large, predatory fish found in oceans and tropical and subtropical waters. Billfish include sailfish, marlin, swordfish, and big eye tuna.) In the 2016 tournament, plaintiff caught the biggest fish, a white marlin weighing 76.5 pounds , arguably entitling plaintiff to the first prize purse of $2.8 million.

    A set of rules govern the competition. Those rules state that “all anglers winning $50,000 of more may be required, at the discretion of the White Marlin Open, to take and pass, at the determination of the test administrator, a polygraph test prior to the distribution of any awards.” In addition, the rules state that the WMO may, at its discretion, also request that a polygraph test be taken by other anglers or crew members present on the boat from which winning fish were caught. The rules also permit a winning angler who fails the lie detector to arrange for a second test at his own expense by an operator approved by the WMO who must conduct the test in compliance with specified standards. An additional tournament rule is that fishing lines cannot go in the water before 8:30 a.m. or after 3:30 p.m. on tournament days.

    Consistent with the rules, the WMO required the four top 2016 prize-winning anglers to report for polygraph examinations to ensure compliance with tournament rules. The results for plaintiff were “inconclusive.” The WMO and plaintiff agreed that plaintiff and two of his boat crew would undergo additional polygraph tests. These tests were administered consistent with the standards laid out in the WMO rules. None of the three men passed. The test results and the evidence established that plaintiff’s fishing lines were deployed and in the water before 8:30 a.m. on the day plaintiff’s apparent prize-winning fish was caught. The pre-8:30 a.m. start violates the tournament rules. As a result, the WMO notified plaintiff that it would not award him the prize money.

    Plaintiff took issue with the results of the polygraph tests, and he alleged deficiencies in their administration. He sued to secure the prize money, claiming breach of contract by the WMO.

    The court identified the requirement of passing a polygraph test as a condition precedent which is an event that must take place before a contracting party is obligated to perform. Thus passage of the test is a prerequisite to the tournament’s obligation to award prize money of $50,000 or more to participants catching the largest qualifying fish. Reciting a basic rule of contract law, the court held, “It is fundamental that where a contractual duty is subject to a condition precedent, whether express or implied, there is no duty of performance and there can be no breach by nonperformance, until the condition precedent is either performed or excused.” Passage of the polygraph test was not excused by the WMO. By failing the test, plaintiff did not satisfy the condition precedent. Therefore, plaintiff was not entitled to the $2.8 million prize money, and his case for breach of contract was dismissed.

    The lesson of this case: Know the rules for activities in which you participate, and comply with those regulations!

    For additional information, see White Marlin Open, Inc. v. Heasley, 262 F.Supp.3d 228 (D. Md, 2017); aff’d, 2018 WL 1531427 (4th Cir., 3/28/2018).

    DISCUSSION QUESTION:

    If you were advising the White Marlin Open concerning modification to rules, would you recommend any changes relevant to polygraphs? Why or why not?

     

  • Olivia de Havlland, 101, "Miss Melanie," Loses Her Appropriation Suit Against FX For "Feud"

    Olivia de Havilland, 101 years old, the legendary two-time Oscar-winning actress who played Melanie Wilkes in "Gone With the WInd" had her suit against the FX Network dismissed.  The suit alleged that the film produced by FX, "Feud: Bette and Joan," about the strained relationships between Bette Davis and Joan Crawford used Ms. de Havilland's name and image without her permission.  Ms. de Havilland alleged in her suit that the film depicted her inaccurately and no one from Fox had contacted her for permission. Ms. De Havilland alleged that the film depicted her as a gossiping, vulgar person when, as the suit noted, she is known for her "honesty, integrity, and good manners." 

    Courts have traditionally relied on the First Amendment in this biographical types of films because of the need for interpretive history in presenting life stories. The case is particularly relevant because of the current crop of biographical films about which those depicted have raised questions of accuracy.  ("I, Tonya" and "Darkest Hour"). Ms. de Havilland has lived a different Hollywood life, remaining quiet about her personal life and never agreeing to cooperate in any biographical projects.  She has only been to court one other time, when she was 28 years old and sued to get out of her studio contract with Warner Brothers.  She had signed the contract in 1936 with the studio, but she refused to participate in certain films that the studio wanted her to do.  Each tie that she refused to appear in films, which she found to be of lesser quality, Warner Brothers tacked on additional time to her contract.  The end result of that case was a victory for Ms. de Havilland and the "de Havilland law," its name, a statute that prohibits personal services contracts for longer than 7 years.  Paul Brownfield, "Hollywood Legend Heads to Court," New York Times, March 4, 2018, p. SS1. 

    Ms. de Havilland was not successful this time. The suit survived a motion to dismiss by FX under the so-called anti-SLAPP law.  The California statute, Strategic Lawsuits Against Public Participation, was passed to allow defendants to have suits dismissed that result in a chilling effect on First Amendment rights.  Many predicted that the suit would be dismissed.  However, the trial judge permitted the suit to go forward because it was based on Ms. de Havilland's right of privacy.  On appeal. the California appellate court held that, "Books, films, plays, and television shows often portray real people.  Some are famous and some are just ordinary folks.  Whether a person portrayed in one of these expressive works is a world-renowned film star -- "a living legend"-- or a person no one knows, she or he does not own history." FX Networks, LLC v. de Havilland, 2018 WL 44732 (Cal. App. 2018). 

    Lawyers for FX, who were joined in amicus briefs by Motion Picture Association of America and Netflix, called the decision a victory for the First Amendment and the creative community.  The Screen Actors Guild (SAG) had filed an amicus brief in support of Ms. de Havilland's position.  The decision permits film makers to proceed with biographical depictions despite challenges from the subjects.  Ms. de Havilland, who was portrayed by Catherine Zeta-Jones in the film took issue with an interview shown in the film that depicted her as called her sister, Joan Fontaine, a name.  Ms. de Havilland said the interview never occurred and that FX fact checkers had done spotty work in their research.  Ms. de Havilland also took issue with some of the scenes that depicted her with Bette Davis.  Ms. de Havilland has called Ms. Davis a "dear friend" and did not feel that the film did justice to their strong friendship. 

    For now, history in cinema, whether true or false, good or bad, stands protected under the First Amendment and does not require permission of the subjects depicted.  Ms. de Havilland, and her estranged sister, Joan Fontaine, were given the title 'f "dame" by Queen Elizabeth to honor the sisters for their contributions to drama. The two sisters were born in England and then raised in Northern California. 

    DISCUSSION STARTERS

    Explain the legal rights at odds in the suit Ms. de Havilland filed.

    Discuss the implications for historical biographies if Ms. de Havilland had won her case.